The Best Ways to Discuss Ethics

How we communicate about values and good conduct is a challenging task in the best of circumstances. And recent corporate history — Enron, WorldCom, Adelphia, Parmalat, Andersen — has not provided us with the best of circumstances. In addition to the big scandals, there’s a long and easily recited list of instances of workplace misconduct: employees violate company rules, workers sabotage their peers, employees steal from their own employers, and executives overstate performance to shareholders.

Companies can take a wide variety of approaches to how to discuss ethics. At one end of the spectrum are companies that rely on their code of ethics or on the exemplary behavior of people at the top.

At the other are executives like Kathleen Edmond, the Chief Ethics Officer at Best Buy, who created an open blog for company employees on ethical lapses and related issues. Employees can visit the website and read about the company policy regarding ethically questionable behaviors, and learn tips on how to best defend themselves from crossing ethical boundaries.

Still, this leaves open the question of what actually works in guiding employees’ ethical behavior. While working with different organizations over the last six year, I have observed approaches across the entire spectrum. My research suggests that subtle changes can produce big differences in the ethical conduct of organizational members. Three findings seem particularly relevant, and they identify some effective practices regarding how to communicate about values that every manager can implement.

1. Setting the right example

In a series of studies (pdf), my colleagues and I found that social norms exert a strong influence that can override other factors in determining how people behave after observing dishonesty. We used a simple experimental paradigm to prove this: We gave groups of college students from Carnegie Mellon University a series of math problems and paid them based on how many they solved correctly in five minutes. We hired an actor who made it clear to the other participants that cheating was possible. The actor was asked to wear a plain t-shirt in one condition, and a t-shirt of a rival university in another. When the actor appeared to be a member of the students’ community, participants were more likely to cheat than when the actor appeared to be a member of another group. The actor was setting the norm for whether cheating was acceptable.

This is a worrisome example of just how easily our own behaviors can be swayed by the actions of the people around us, like our co-workers, managers and colleagues. Minor ethical lapses can have major impacts. So, setting the right example is likely to have trickle-down effects throughout the organization.

2. Framing ethics to highlight prevention

Most companies encourage managers and employees to focus on promoting positive economic outcomes. For instance, leaders may stress the importance of reaching specific financial goals by a given date. By contrast, ethics initiatives are often packaged as a set of constraints, compliance schemes, and violations. For instance, the codes of conduct of many companies include statement such as “employees must avoid conflicts of interests” or “employees may not improperly use any company assets.”

It turns out that this subtle difference in the framing of business objectives versus ethics affects employee behavior. In a series of studies (pdf), my colleague Joshua Margolis and I have compared the effects of two ways of framing ethical conduct: promotion of being ethical and prevention of being unethical. What we consistently find is that environmental cues, such as the way tasks are framed, that trigger promotion rather than prevention are more likely to lead to cheating because they heighten people’s risk-seeking tendencies. So, carefully crafting policies, codes of ethics, and task directives is likely to influence ethical conduct.

3. Stress the importance of means

One last insight worth noting. Managers and their companies regularly conduct performance reviews and reward organizational members for the outcomes they have produced. Yet, too little attention is paid to the means — how those outcomes were achieved. In a series of studies (pdf), Max Bazerman, Don Moore, and I consistently found that people judge the unethical behavior of others more harshly when it resulted in a negative rather than a positive outcome, even when the actions that led to a good outcome were more egregious from an ethical standpoint than those that led to a negative outcome.

You can easily see the problem with this tendency: performance evaluations might wrongly reward those employees who achieved good work outcomes but did so through ethically questionable practices. An effective solution to this problem is to include an assessment of the “means” used to achieve given objectives during performance evaluations. In fact, this is a solution that companies like Novartis have already adopted.

If you’re serious about fostering ethical behavior throughout your organization, you can turn these three principles into implementable means to communicate that effectively. In this way, ethics won’t simply be relegated to your HR department, but it will pervade management at all levels.

Francesca Gino is an associate professor of business administration in the Negotiations, Organizations & Markets Unit at the Harvard Business School. Her research focuses on judgment and decision-making, ethics, social influence, and creativity.